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Regional disparities trouble both India and China

An interesting aspect of the 19th Communist Party Congress was a panel discussion between President Xi Jinping and officials of the Guizhou Province, from where Xi was elected as a delegate in April 2017. In recent times, Guizhou has been important politically. One of Xi's close associates, Chen Miner worked as Governor of Guizhou while Xi was the party chief there. Xi's predecessor Hu Jintao also hailed from the Guizhou Province.

Despite China's rapid growth in recent years, some provinces still have to deal with poverty. During the economic boom of the 2000’s, inland provinces had managed to reduce the income gap with coastal provinces. This was attributed to a worldwide commodity boom, which resulted in increasing demand for raw materials produced in the inland provinces. In recent years however, growth in inland provinces has witnessed a significant decline, while provinces like Shanghai and Guangzhou have managed to retain stellar growth rates.

Guizhou, China’s poorest province, has pulled eight million people from poverty in the past five years. A significant number, however, remain below the poverty level.

A number of strategies have been devised to deal with skewed growth and ensure that the backward regions in the inland region, as well as border provinces can be put on the high growth trajectory. The most high profile is China’s ‘One Belt One Road’ initiative, which seeks to enhance connectivity with South East and Central Asia and benefit provinces sharing borders with these countries.

Skewed economic growth is not just a problem in China. India, led by a leader with a strong majority, Narendra Modi, faces a similar problem. While some states like Andhra Pradesh, Maharashtra, Gujarat, Karnataka, Kerala, Tamil Nadu and Haryana have witnessed steady growth, others have improved their economic indicators but are still lagging behind. William Antholis in his book Inside out India and China: Local Politics goes Global (2014), while highlighting the economic march of both countries, has brought to the fore the issue of skewed development, with some provinces/states having done better than the others in both countries.

This is something to which Modi has drawn attention while speaking about the need for greater growth of eastern India - Bihar, Odisha and West Bengal. The prime minister, who hails from Gujarat, also fought parliamentary elections from Varanasi in Uttar Pradesh, saying, “If we have to develop India, the chariot of development needs to run on two wheels- eastern and western India,”

Some poorer states of eastern India - Odisha, Bihar and West Bengal - are led by strong regional leaders; Odisha by Naveen Patnaik (Biju Janata Dal), Bihar by Nitish Kumar (Janata Dal United), now a BJP ally, and West Bengal by Mamata Banerjee (Trinamool Congress). Some other states which still have a long way to go are Uttar Pradesh, Chhatisgarh, Jharkhand, Madhya Pradesh and Rajasthan, all led by BJP governments.

A number of the above states have improved their position in Ease of Doing Business Rankings. In the 2016 rankings for instance, low income states which improved their position were: Chhattisgarh: The state had 97.32 per cent implementation rate in 340 reform measures, and fourth rank); Madhya Pradesh (97.01 per cent-implementation, fifth rank); Jharkhand (96.57 per cent implementation, rank seven; Rajasthan (96.43 per cent - implementation, rank eight); Odisha (92.73- implementation, rank 11); Uttar Pradesh (84.52 per cent -implementation, rank 14) and Bihar (75.82 per cent-implementation, rank 16).

Chief Ministers from all these states have also sought to reach out to foreign investors.

However, if one were to go by the Public Affairs Index, a survey by the Public Affairs Centre (Bengaluru) some of these states, in spite of making rapid strides, have a long way to go. Bihar was ranked 18, Jharkhand 17, Odisha 16 and Assam 15.

The criterion for the ranking are ; essential infrastructure, human development, social protection, issues pertaining to women and children, crime, law and order, delivery of justice, environment, transparency and accountability, fiscal management and economic freedom.

Some immediate measures can help:

Modi has spoken about cooperative federalism. The centre and state need to work jointly, irrespective of the political party in power. Bitter campaigning in state elections has a negative impact. Apart from this, the central government’s relations have also worsened with leaders of two states, Odisha and West Bengal, which are crucial for an economic turnaround of eastern India.

State governments need not focus only on manufacturing, and emulating already well developed states. They can work on their own strengths, and even improvement in areas like tourism can play a significant role in their economic turnaround.

There needs to be a formal mechanism whereby states interact with each other and learn their policy experiences and emulate those best practices well. No such mechanism exists yet, though some states do hastily replicate others’ welfare policies without going into the nuances. As in the Chinese case, it is important that the more developed states work with the less developed ones and share their experiences.

Big ticket infrastructure projects need to be focused on less developed regions. India cannot afford regional disparities. To reduce these, New Delhi will have to take some risks, and the results may not show immediately. The country’s immense economic potential, including those of the lesser developed regions and major infrastructure investments are bound to yield results.

Also, scholars, policy makers and members of civil society from India and China should interact. India should seek to learn from the welfare policies, as well as approach towards lesser developed regions in China.

The current interactions between Indian and Chinese provinces are restricted to a few, while academic and civil society interactions too have not sufficiently focused on expanding province-state exchanges, even though a dialogue – India-China Forum of State-Provincial Leaders was initiated in May 2015 during Modi’s visit to China. These need to be expanded.

(The author is a senior research associate with the Jindal Global University. He can be contacted at tsmaini@jgu.edu.in)

For Smith, a “good” government was seen to be one which acts in the interests and security of the people while promoting a greater division of labor, labor productivity and a higher per capita income, which were seen as the key determinants for the wealth of a nation.